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Bitcoin mining is a great way to earn cryptocurrency. However, there has been a lot of concern about the legality of owning and mining Bitcoin around the world.
On the whole yes, Bitcoin mining is legal. Some countries, however, have ruled that Bitcoin as a currency is illegal and thus mining is prohibited there.
What is Bitcoin Mining?
Bitcoin mining is a process that serves two purposes. Firstly, to verify and confirms transactions. Then, as a result, new Bitcoins are created and issued.
All Bitcoin transactions are recorded in blocks on a public ledger known as the Blockchain. As a new block is discovered, it is then added to the blockchain. All blocks are created by solving complex equations with the use of computers. For each new block created the miner is rewarded.
You are able to mine Bitcoin using pretty much any computer. But without a powerful processor, you are likely to have very limited success.
There are many specialised computers available which can help you mine Bitcoin more successfully. These machines are known as mining rigs. They’ve been specifically designed to mine Bitcoins more efficiently. Solving the complex equations needed to produce new blocks.
Where is Bitcoin mining considered illegal?
Some governments around the world are against Bitcoin and its mining. It’s seen as a threat because it is competing with their countries’ currency. There are some governments which believe Bitcoin to be hindering their financial control. They don’t wish to allow this alternative currency in their country.
It is currently illegal to mine Bitcoin in:
In 2018, Russian authorities announced that the use of Bitcoin was legitimate in the eyes of the law. With a population of 146 million people, Russia’s move to legalise Bitcoin is an important step. Not only for Bitcoin itself but other digital currencies as well.
In North America and Western Europe Bitcoin mining and possession is completely legal. As long as it is not tied any to illicit purchases or activities. In fact, not only is it legal, there are even regulations in place to provide protection to the mining operations.
Is Mining Legal Where I Live?
Generally, Bitcoin mining is legal if you’re allowed to use and own the cryptocurrency in the country in question. If where you live owning Bitcoin is illegal, mining is more often than not also outlawed.
There are however some exceptions to this guideline and the legality of Bitcoin mining is not always crystal clear.
For example in Iceland.
Bitcoin mining In Iceland
It is technically illegal to own/trade Bitcoin in Iceland. But there are still a number of large-scale, well-known mining operations throughout the country.
Iceland currently has banned the trading of local currency (kroner) for Bitcoin. The economy in Icelandic struggled after the Great Recession and the government wished to protect their local currency. They were concerned that people would abandon the kroner in favour of Bitcoin, and that the local currency would suffer. However Iceland has not outlawed the mining of bitcoin.
What about the rest of the world?
Some countries, including the majority of Africa, have remained tight-lipped on the issue. They are yet to pass any legislation for or against Bitcoin. It’s important to keep a close eye on these countries because the regulatory environment could change at any time. Bitcoin laws can fluctuate as much as its price!
When legal mining becomes illegal
As stated earlier, it is legal to mine Bitcoin in the majority of countries. Having said that, mining becomes illegal if you’re stealing the resources such as electricity and processing power to mine.
Prosecutors in some countries like South Korea and the United States have promised the prosecution of people who use Bitcoin for unlawful purposes.
In most countries, Bitcoin mining is perfectly legal. As laws change and Bitcoin gains popularity, questions about the legality of it will continue to be raised. The technical rules for mining are also constantly evolving and continuously up for debate.
*This post is not intended as legal advice. Laws and regulations surrounding the practice of Bitcoin mining are always subject to change. Therefore it’s important to do thorough research on your specific area before investing in mining.